Let peer to peer aid be the new model driven by people not governments.

Why are governments involved anyway? Well that’s not about aid really, its about influence…ok let’s be brutal it’s about money and power. Yes it’s all about politics: quid pro quo, backhanders and the rest of it. We’ll give you money and you help us out, vote for us at the UN or give us some nice contracts for whatever.

That’s the good bit. Now let’s see it in action. Up the government chain on one side and down the other. Hands out all the way up, across and down. Let’s not even go there. Of course some governments take this seriously and see aid as a genuine redistribution of national income but the model has been sorely abused over the years.

Even locally we had the Niue government telling the NZ PM that if it didn’t receive aid quickly it would turn to China instead. It doesn’t get more blatant than that. More and more aid has become a strategic tool in the foreign office of wealthy nations.

Francis Fukuyama recently reviewed two books on the subject both with similar themes but differing opinions: “The Challenge for Africa” by Wangari Maathai and “Dead Aid” by Dambisa Moyo. What I like most is that these are books coming from Africans themselves and women as well. It’s a refreshing change to Western University academics. It’s also an area of quite passionate debate. Here’s a great debate with Dambisa Moyo, Hernando de Soto, Paul Collier and Stephen Lewis on whether foreign aid does more harm than good.

Some issues are clear: corrupt governments and a weakened civil society; years on the western government welfare teat; trade barriers and resource depletion. The West carries the guilt and assuages it with cash even if its straight into the Swiss bank account of the latest tyrant.

So if governments are the problem why not remove them from the picture?

Well perhaps that is what will happen. Today the UK Conservatives unveiled a new policy on aid. As part of that they proposed a Gbp40m fund called “My Aid” which would allow the people to vote on their favourite aid project. Ok this all sounds a bit like the next reality show but for me it signals a subtle change in direction.

What if governments simply dropped their Aid budgets and gave that money back in either tax cuts or tax credits for giving? What would happen?

- Microfinance would take off.

- Giving platforms would widen and internationalise.

- There would be more targeted and personal involvement.

- Social Media would drive this (TwitterAid?).

- This would lead to grassroots build up and development of localised civil society.

- It may lead to an increase in giving as government moves out of the way.

- And maybe less celebrity nonsense as well!

Above all this p2p Aid model would be people driven and . as with microfinance, be very empowering. The aid infrastructure will still be necessary but that too may require some modification or restructuring. The Kiva and Wokai models will be very useful for this as will giving and donating platforms.

So when it comes to managing our money we are faced with the same questions: who am I and what is my intention?

It seems to me that we have 3 ways of using our money: Giving, Lending or Buying.

Giving is the simple act of directing one’s money to somone else with no expectation of financial return inclduing the original gift. But there is a clear intention that the gift should have some kind of impact. Simply this can be regarded as giving money to charity or a fundraising appeal. Your return is hopeful, that some positive outcome or impact will be achieved by way of your contribution. This is a powerful way of expressing your intention. Of course one can also give your time, goods and services for no financial return and this is a more hands on approach.

Lending, otherwise known as saving, is also a powerful tool. When you deposit your cash in the bank you are in effect lending to the bank. In legal terms you are an unsecured creditor of the bank. There is little intention here as we tend to see the process as the bank doing us a favour. But when it comes to peer to peer lending, microfinance or simply lending money directly to friends, the process takes on a deeper signifiance. There is a more direct energy involved and a desire to participate in an outcome. The personal connection to borrowers helps create this possibility. Another form of lending is to large business via corporate bonds. This is akin to saving in the bank except again there is a directness involved. A large business wants to raise $100m and I lend it $20,000. I’m a small piece of that but I’m essentialy helping to fund the business. But there is still some distance there as I’ve probably dealt through a boker or investment advisor. What I am keen to see is more peer to small business in developed countries. We’ve seen Kiva open up loans into the US now and soom we will see more acceptance in people lending larger sums to small businesses. Not so much microfinance as peer finance. What better way to create strong and trusted communities than people lending to businesses they buy from.

The third form of intentional money is the process of buying. This is two parts: buying for ownership in a business and buying for personal consumption. The latter is the world of ethical and values based purchasing. It’s a well developed market and I won’t got into that. But actually directing your money into businesses through ownership is another way to direct the flow of your financial intention. Whether it’s ethical investing at the macro level (buying into ethical funds) or at the micro level (investing in start ups that share your goals and values). The micro level is more interesting because the impact of your investment is greater. In the macro world of stock markets and large companies your investment is not so influential because of the way institutional investors control so much of the market.

We have many choices when it comes to dealing with our money. Each time we make a financial decision we have an opportunity to express our intention. Its a very powerful force. The more we align our choices with who we are, the more powerful our impact becomes. We become an efficient intentional system

As they say money talks.

Small businesses in NZ have seen no relief from high interest rates in the recent lowering of rates here. At the same time credit is hard to come by and many business owners have resorted to credit cards to keep their businesses going.

This is a troublesome state of affairs given its the productive economy that has to earn the dollars to pay back the humungous debt necklace hanging around the necks of Kiwis.

So what’s the state of play with microfinance at the moment? Well Kiva is going great guns. It’s really tapped into people’s desire to help and be generous in giving but created this new joy of creating and empowering change for people. It connects people together and that personal touch pulls the punters in.

The more tradtional p2p lending services are not finding life so easy. Charis Palmer reports here on recent developments citing problems for Prosper in the US and some success for Zopa in the UK. Locally Peermint has fallen by the wayside, Nexx hasn’t really got going and Lending Hub has joined a busy Australian market.

So there’s no shortage of platforms but it’s proving harder than expected to deliver the business. But there seems to be no platform for small businesses to secure funding. This is certainly an opportunity as there is certainly a strong and established market on the borrowing side with appropriate forms of due diligence available.

The major stumbling block for p2p start ups has been compliance with various regulatory authorities. However there may be ways around this and with politicians supportive of the small business sector the time may have come for a serious attempt to create what would be a mini-corporate bond market funded by the retail investement market direct.

Now that sounds like a major step forward in building a more productive economy.